— Matt Badiali (@Matt_B_Guru) January 9, 2018
Is the fearsome and a potentially high damage causing commodity uranium about to see better times ahead after peaking at its lowest in October 2016? Quite possibly yes, as per Matt Badiali’s analysis for uranium in 2018.
The downfall of uranium began in 2011 after the frightening occurrence of the Fukushima disaster in Japan. It alerted everyone to its high potential of causing energy disasters in the aftermath of unpreventable failures such as earthquakes and tsunamis.
The uranium price, before its downtrend, was sold for $72.50 per pound in January 2011. It fell to a shocking low price of $18.75 per pound in 2016. The steady decline of uranium came as a shocking reality, considering the “green” status attributed to it. Even the belief (as held by many) that uranium reduces greenhouse emission, compared to its counterpart hydrocarbon, couldn’t aid its fall.
Apparently, the Fukushima natural disaster enabled many to realize the storage problems of uranium and it seems they plan to cling to this perception for now. But what exactly was so impactful in retaining this concern?
When the earthquake and tsunami struck the region of Fukushima Daiichi nuclear power plant in March 2011, the earth disaster damaged a reactor. This was followed by the tsunami that inundated the area, destroying the backup generators that were supposed to maintain the temperature in the absence of the main power source. Without any functioning power, the cooling water couldn’t reach the plant to prevent radiation meltdown. This paved way for the greatest nightmare of any nuclear power plant operator to come true.
A lack of foresight into possible mishaps contributed to this error largely. The Tokyo Electric Power Company that operated the nuclear plant was unprepared for this situation. The result created a rippling effect. Many countries became wary of nuclear power reactors, with Germany going so far as to shut down all its nuclear reactors. As a result, demand for uranium fell and so did its price.
In November 2017, the uranium production mine, Cameco Corp, cut production after continuing to witness the fall of uranium prices. The struggle to maintain profitability, led to the decision to suspend operations for ten months at its flagship McArthur River mine. Kazatomprom, Kazakhstan’s state-sponsored uranium miner, followed suit and cut down on uranium production by 20%.
Matt Badiali’s chart demonstrated that shares of Uranium Participation Corp. dropped in response to this development. Shares of other uranium companies plunged as well.
Analysts believe the price of uranium can gain $30 per pound from these cuts in the coming year. This possibility will be a windfall for uranium producers. Companies like Cameco will experience revenue and earnings spike up. This trend will be closely observed into 2018.
Energy expert Matt Badiali, has an in depth knowledge in mining, agricultural and fossil industries. He’s analyzed many CEO schemes and observed trends in the stock market. His foresight is based off his experience and knowledge regarding many different fields in which he has closely interacted with professionals and experts. He continues to enlighten us with his perceptible predictions regarding good and useful investments.